Resource Capital Research has secured for its Australian and New Zealand subscribers an opportunity to participate in the shortfall placement for the recent entitlement issue offering of Alliance Resources Limited.
Please find details below relating to Alliance Resources Limited and this opportunity.
Rights issue announced (2 Dec) to raise $5M at 0.08/share (extension closed 19 January 2015 with 49.44% acceptances including full uptake from major shareholder Abbotsleigh).
The Four Mile uranium project (25% AGS — reducing to 15% by December 2015) has achieved stellar operating performance since commissioning Apr '14 with estimated production of 1.5Mlbs U₃O₈, and September quarter C2 cash costs of A$33/lb; a period that coincided with a 40% uplift in the uranium price to ~A$45/lb currently.
Four Mile production commenced Apr '14; first uranium shipments Sept '14. September quarter production was 717klb U₃O₈ at a cash cost of A$24.48/lb (C1, A$32.99/lb C2). Budgeted production for 2015: 2.6Mlbs U₃O₈.
High grade ISR project with a large resource base: 70mlbs at 0.33% U₃O₈ (11mlb AGS share at 15%) plus Exploration Target upside of 41-78mlbs.
All production has been stockpiled to date; 510klb U₃O₈ has been shipped to a converter in Canada though Quasar has declined to sell into the market. This has put financial pressure on AGS which must meet JV cash calls, and as a result, has elected to make no JV payment for 2015, diluting its interest to 15%.
AGS is currently trading near its 12 month low in contrast with other ISR uranium producers that are trading well above this at around 20% to 35% above 12 month lows. The current uncertainty for AGS concerning the sales and marketing rights dispute with Quasar, the forestalled project revenue flows and associated capital raising, in our view, has led to an overly cautious market reaction.
RCR has an AGS 12 month target price of $0.25/share.
The spot uranium price is US$36.50/lb (19 January 2015) - a strong turnaround from midyear 2014 when the spot price reached US$28/lb (30 June). The long term price is US$49.50 (31 December 2014, Cameco). Positive sector fundamentals longer term are expected to drive the incentive price above US$60/lb from 2H16.
Flagship Four Mile Uranium Project (SA, AGS 25/15%) is adjacent to the operating Beverley In Situ Recovery (ISR) uranium mine (Heathgate) located 550 kilometres north of Adelaide in South Australia.
Alliance's 100% owned subsidiary, Alliance Craton Explorer Pty Ltd owns 25% of the project (reducing to a 15% interest by 31 December 2015). Quasar Resources Pty Ltd is owner of 75% (increasing to 85%) and acts as the manager of the project and is affiliated with Heathgate.
DETAILS OF THE OFFER
The issue price offered under the Entitlement Offer was $0.08 per share and includes one (1) attaching New Option for every new Share subscribed for, each exercisable into one Share at an exercise price of 15 cents per Share and expiring on 30 September 2015, for no additional cash consideration.
The offer price for shares represents a discount of approximately 23.8% to the closing price of Alliance shares last traded on ASX on 1 December 2014 (10.5 cents) prior to announcement of the rights issue and a discount of approximately 27.2% to the 15 day volume weighted average of Alliance shares traded on ASX (10.994 cents).
PROSPECTUS AND APPLICATION FORM
The Entitlement Offer was made under a prospectus dated 2 December 2014 and a supplementary prospectus dated 16 December 2014 (which must be read in conjunction with the prospectus) both issued by Alliance Resources Limited. The Entitlement Offer contemplates the placement of shortfall shares and this invitation to you is made under that prospectus and supplementary prospectus in accordance with the shortfall provisions.
Any questions concerning the Offer can be directed to Bob Tolliday at Alliance Resources on (03) 9697 9090; John Wilson at Resource Capital Research on 0401 625 385; or Steve Martin at Barclay Wells on 0414 991 084.
The prospectus and supplementary prospectus, together with the application form can be accessed here.
General advice only: - The information provided in this email has been prepared without taking account of your objectives, financial situation or needs. You should, before acting on the advice, consider the appropriateness of the advice having regard to these matters and, if appropriate, seek professional financial, investment and taxation advice. RCR does not provide personal financial advice. RCR is merely bringing this opportunity to your attention.
Jurisdiction: - This investment opportunity is only available to residents of Australia, New Zealand and other jurisdictions in which the offer, invitation or subscription does not violate that jurisdiction's laws. Overseas investors should consider the section of the prospectus concerning overseas investors before making any investment. This investment opportunity is not available in or to residents of the United States of America.
Accuracy of information: - The information in this email and all attachments, including any opinions or forecasts, has been obtained from sources RCR believes to be reliable. RCR has taken reasonable care in providing such information. However, RCR does not warrant the accuracy, completeness or currency of, and will not be liable for any inaccuracies, omissions or errors in, or for any loss or damage (including any consequential loss) arising from reliance on, the information in this email and attachments.
No guarantee: - RCR does not guarantee the performance of any investment. Any information relating to the distribution or performance history of any investment should not be taken as an indication of the future performance of the investment. If RCR expresses an expectation or belief as to future events, results or returns generally or in respect of particular investments, RCR makes such statements in good faith and believes them to have a reasonable basis. However, such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from such forward-looking statements. No guarantee of future returns is given or implied by RCR.
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AGS Price at posting:
6.6¢ Sentiment: Sell Disclosure: Not Held
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